IREPAS in Athens: Global longs market in much better shape compared to 2016, but China needs to be watched

The 77th meeting of IREPAS (International Rebar Exporters and Producers Association) was held in Athens, Greece on September 24-26, 2017. There were 134 producer representatives among the 433 registered delegates from 44 different countries. There were also 76 registrations representing 43 different raw material suppliers.

At the opening of the conference, Murat Cebecioglu, chairman of IREPAS, said he believed the outlook for the next quarter is very good as long as there is no surprise from China, despite the last quarter of the year always being very challenging. Mr. Cebecioglu added that the solid supply-demand balance combined with low inventories have given everyone reason to believe that the strength of price levels will be sustained up to Christmas.

On the last day of the conference, producers of long steel products and steel billets, as well as traders and raw material suppliers, shared the conclusions reached at their special committee meetings regarding the current situation in the markets with the general participants at the event.

Raw Material Suppliers: Solid increase in scrap demand so far in 2017

Jens Björkman, chairman of the raw material suppliers committee, stated that during 2017 global steel production has shown continued strength, resulting in a solid increase in scrap demand. He added that increased Chinese domestic consumption has helped to reduce steel exports coming from China, contributing to a strong global steel market for most of this year.

Mr. Björkman said that one of the major changes in the market is that China which had long been a net scrap importer started to export scrap despite the 40 percent export duty and became a net exporter as induction furnaces halted production as part of structural reforms in China.

The raw materials committee chairman indicated that the current situation seems very encouraging for the rest of the year for the scrap market, considering that Turkey, a major scrap consumer, has increased its steel production to above 3 million metric tons per month lately. He went on to say that, with the reduction of steel exports from China, EU-based producers have been doing well for the past nine months.

Commenting on scrap pricing in the EU, Mr. Björkman said that the recent build up of scrap supply has put pressure on pricing for the short term, while domestic prices of obsolete scrap in the EU, especially in Germany, are at record high levels. He added that the market will likely see high prices for prime scrap.

Regarding the electrode shortage, Björkman stated that, given the induction furnace closures in China, it will be an interesting year to see how this affects the electric arc furnace-based steel markets.

Traders: Section 232 is a major concern

Michael Setterdahl, representing the traders committee, said that the main concern of the traders is the ongoing Section 232 investigation in the US, though adding that US Commerce Secretary Wilbur Ross has recently announced that the results of the investigation have been delayed until after the planned tax reform.

Commenting on the recent antidumping duties on Turkish rebar, Mr. Setterdahl said that most traders believe that nothing can really replace Turkish suppliers, since they are one of only two markets that can ship 50,000 metric tons of rebar within two months, the other being China.

The traders committee chairman stressed that there is a rebar surplus of one million metric tons in the EU market and this is because of reduced rebar imports from Algeria which used to import 2 million mt of rebar per year. Regarding the increased demand in the Chinese domestic market, he said that this gave Turkish suppliers the opportunity to ship to Southeast Asia.

Mr. Setterdahl also pointed out that the market should be vigilant about the absolute numbers regarding the decreases in China’s imports or exports, rather than about the percentages. He also said that traders are also concerned about China reentering the billet market, adding that the question is when China will resume billet exports, not if it will.

Steel Producers: Market is in much better shape thanks to improved demand

Murat Cebecioglu, chairman of IREPAS and also of the producers committee, said that the global market is in much better shape than in 2016 thanks to improving demand and decreasing pressure from China. He stated that the general sentiment in the market is very positive, with the supply-demand balance helping the steel market to do much better business.

Mr. Cebecioglu pointed out that, amid China’s absence from the export market, Turkish producers were able to ship to the Far East. He also commented on the GCC region, indicating that the export ban in Saudi Arabia has been lifted and so there is a new player in the market.

The committee chairman said that producers do not expect steel prices to go down further; they may soften a little but they are unlikely to decrease much. Although scrap prices are down, he said that this will be offset by the increased cost of electrodes, and so there will be no change in producers’ cost structure. Mr. Cebecioglu said he believes that the electrode shortage is not a short-term problem. He expects it to continue into the first half of 2019. He also warned that if it continues into 2019 it may affect steel production as well.

Commenting on the Section 232 investigation, Cebecioglu said that, even though the results have been delayed until after the planned tax reform, there is still a deadline – the report has to be presented to President Trump and then he will have to approve it within 90 days.

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